Father and Son Charged with Multi-Million Dollar Investment Fraud and Bank Fraud Scheme
BIRMINGHAM – Two men—father and son— were charged today with concocting a scheme that allegedly defrauded individual investors and Alamerica Bank out of millions of dollars, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jay E. Town of the Northern District of Alabama FBI Special Agent in Charge Johnnie Sharp of the Birmingham, Division, and IRS-Criminal Investigation Special Agent in Charge Thomas J. Holloman.
Donald V. Watkins Sr., 70, of Atlanta, Georgia, and Donald V. Watkins Jr., 46, of Birmingham, Alabama, were charged in a 10-count indictment filed in the Northern District of Alabama with seven counts of wire fraud, two counts of bank fraud and one count of conspiracy to commit wire fraud and bank fraud.
According to the indictment, from 2007 until at least 2014, the defendants induced investors to pay millions of dollars into a bank account controlled by Donald Watkins Sr. by telling the investors that their money would be used for specific purposes related to the international growth of two companies associated with the defendants. Instead of using the money for those purposes, the defendants redirected the funds for other uses, including the payment of personal tax obligations, personal loan payments, alimony, and clothing, the indictment alleges.
"Persons who defraud investors through material misrepresentations, omissions, and lies must be held accountable," said lead prosecutor, Lloyd Peeples. "As set forth in today’s indictment, the defendants mislead numerous individual investors and used their investments for unrelated purposes.”
For example, the indictment quotes one solicitation in which Donald Watkins Sr. represented that he needed an investor’s funds to pay for investment bankers and lawyers ahead of an anticipated business transaction, when, in fact, the funds allegedly went toward the payment of unrelated expenses. The indictment also alleges that, up until 2016, the defendants sent the investors stakeholder reports and other updates that purported to keep the investors apprised of developments related to the companies involved, but were instead intended to conceal what had really happened to the investors’ money.
The defendants are also charged with conspiring to obtain loans from Alamerica Bank through an allegedly fraudulent scheme involving the use of a third party to take out the loans on their behalf. Finally, the indictment charges the defendants for fraudulently obtaining money from Alamerica Bank by convincing one of their investor victims to apply for loans under his name, when—as they had planned—the defendants ultimately took and used those funds for their own purposes.
The FBI and IRS-CI investigated the case. Trial Attorney Kyle Hankey of the Criminal Division’s Fraud Section, First Assistant U.S. Attorney Lloyd Peeples and Special Assistant U.S. Attorney Beau Brown of the Northern District of Alabama (the latter of whom is on detail from the Alabama Securities Commission) are prosecuting the case. Former Assistant U.S. Attorney Xavier O. Carter also was instrumental in the investigation.
The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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